Employee who cost French bank €4.9bn

France's reputation as the intellectual home of quantitative finance took a beating today after Societe Generale admitted that a lowly trader called Jerome Kerviel had incurred losses of €4.9bn. The bank accused Kerviel (right), said to be in his early 30s and on an annual salary of less than €100,000 - miserly by trading floor terms - of an elaborate and "exceptional" fraud.

The man and his superiors have been suspended and the Bank of France is investigating. But the bank's chief executive will remain in place and the bank will still record a profit for the past year. Its stock price has nonetheless plummeted and it seems an eternity since The Banker magazine named SocGen bank of the year for equity derivatives in 2006 and 2007.

London and New York as well as Paris are

stacked with French money managers, who hit far above their weight. The emphasis on mathematics in the French school and university system are credited with this fact. Some of the greatest financial theoreticians teach in Paris' famed Ecoles Polytechniques, the graduate schools reserved for France's cleverest. In recent years, these schools' graduates have developed an outsized presence on the trading desks of banks and hedge funds around the world.

So how could one of the junior members of this brilliant tribe have made such a mess?

SocGen said yesterday that Kerviel had been taking unauthorised derivative positions on European equity market indices throughout 2007 and into this year. The positions were discovered on January 19 and 20 and the bank decided to close them down as quickly as possible. It is probable that the trader was facing unsustainable margin calls on his bets. Daniel Bouton, the CEO of the bank, said: "The transactions that were built on the fraud were simple positions